Steel Products Prices North America

Letter to the Editor: Higher Steel Prices Hurts Manufacturers

May 8, 2016

Steel Market Update received the following letter from an executive associated with the trading industry:

I enjoyed reading your article on whether ‘ 2016 will end up being another 2004 and 2008 and would like to add these observations:

1. In 2008 the economies all over the world were overheating ( not only in the steel industry ) but I can’t see that happening in 2016 in the world. The situation in the USA however is different. If you look at the development of steel prices in the US since December as shown in your report and see the almost 50% increases for the main flat rolled product lines you have to wonder whether these increases are truly based on increased demand or whether they are based on less imports. My suspicion is that the mills are increasing the prices because of the successful filing of trade cases against more countries than ever. Haven’t we seen this scenario before ? When you hear or read that XYZ mill has closed their order book for x month and maybe even use the ” A ” word ( A for allocation ) you know that many buyers will start buying more than they actually need, inventories will build up and, well, you know the rest of the story.

2. While higher steel prices are good for the steel producers they cannot be good for manufacturers of products made from steel. If you have to pay about $ 800.00/ton for Cold rolled coils ( or more with extras and freight added ) you can’t compete with a manufacturer in another country that pays over $200.00/ton less for the same product. Both presumptive presidential candidates are talking about bringing manufacturing jobs back but how can a manufacturer of water heaters, metal cabinets, pipe and tubing compete if your overseas competitor pays $200.00/ton less to make that same product? Helping one industry doesn’t necessarily help the economy.